Worries about the health of the Chinese economy are mounting. Despite the respectable growth of 4.8% for the first quarter of this year, several indicators suggest that it is starting to come under considerable strain. Last month’s economic data showed an economy that is struggling in the face of multiple headwinds: April’s Purchasing Manager Index (PMI) – which measures the Chinese manufacturing sector – dropped to 47.4, the lowest figure since the start of the pandemic, while export data weakened to just 3.9%, the slowest monthly growth since June 2020. Getting the economy back on track will surely be one of the major tasks of the Chinese government in the coming months.

Alicia Garcia-Herrero, Chief Economist for the Asia-Pacific within Natixis, speaks to Joe Cash on the levers the Chinese government has at its disposal to try and put the economy back on a more even keel and explains why, in the absence of choosing to live with Covid, economic policymakers will have their work cut out if they are to be successful. 

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